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Glossary

Comparable companies analysis

Valuing a target by reference to the trading multiples of similar public companies.

Also called: comp comps, trading comps, public comps

Definition

Comparable companies analysis estimates a target’s value by applying the trading multiples of comparable public companies to the target’s metrics:

target_value ≈ peer_multiple × target_metric

Common multiples: EV/Revenue, EV/EBITDA, P/E, EV/(EBITDA – Capex).

Why it matters

Comp comps anchor the analysis in market reality — what investors are actually paying for similar businesses today. They are a standard component of every fairness opinion.

Limitations

  • True comparables are rare; analysts always make subjective adjustments for size, growth, margins, and geography
  • Trading multiples reflect minority-interest pricing; control transactions typically clear at a premium (the control premium)
  • Sector multiples can be distorted by short-term sentiment

Distinction

Precedent transactions apply the multiples paid in past M&A deals — they include a control premium and are typically higher than trading comps.

Related terms